Good afternoon, Madeline, and welcome back. I want to thank you all for joining our third quarter earnings conference call. We are very pleased with our performance and the progress we've made against our key focus areas. Our third quarter results both validate the strategic shift we made to our subscription business and exemplify the outstanding execution by the team. The proof points we're seeing across the business give us confidence that we have transitioned beyond stabilizing the business, having now built a strong foundation for accelerated growth.

Turning to highlights of our third quarter financial results. We achieved record third quarter revenue of $190 million, an increase of 13% year-over-year, well exceeding expectations. Subscription revenue also grew 13%, accelerating from the second quarter and marking our third consecutive quarter of sequential growth. Subscription revenue growth was again led by our compliance offerings, demonstrating the strong demand for our expanded compliance concierge product suite.

Further, our compliance offerings continue to show encouraging improvement in first year retention rates, demonstrating that more established customers are recognizing the incremental value of our premium products. Profitability remained strong with an adjusted EBITDA margin of 24%, resulting from disciplined execution and continued efficiency gains. This is despite incremental investment in product and AI. We generated solid free cash flow of $47 million in the quarter, further strengthening our balance sheet and financial flexibility.

With our strong third quarter performance and the momentum in our business, we are raising our full year revenue growth outlook to 10%, effectively doubling our initial full year guidance. We're maintaining our 23% adjusted EBITDA outlook as well. As we continue to identify cost savings, we plan to redeploy much of these gains into strategic investments that position the business for future growth. Turning now to our 3 strategic focus areas.

When we initially laid out these key focus areas last summer, our objective was to attract quality share by strengthening our subscription business and offering greater value to customers. This strategy not only fueled our turnaround, it has allowed us to attract more established businesses, activating a larger portion of our SAM and helping us accelerate growth. Building on this progress, we are now expanding our focus areas beyond business formation to serve existing businesses.

We believe we are best positioned to capture this opportunity through our core competencies of technology and AI supported by our vast data set and large network of attorneys and other experts. We believe this positions us to capture a greater share of our serviceable addressable market by broadening our customer base and driving higher wallet share. Our goal is to activate the existing SMBs who today don't act on legal and compliance needs due to cost, access or fear.

We expect to achieve this goal through the continued introduction of higher-value products and investments in AI, both in our people and in the tools that enhance productivity and decision-making. This strategy is rooted in integrating human experts into the workflow at critical junctures that AI cannot fully address to ensure accuracy and customer confidence. Importantly, our AI tools will provide a level of customization to help businesses focus on their goals while LegalZoom supports the back end.

Turning now to the progress we've made across our 3 strategic focus areas. Our first focus area is delivering innovation across the subscription business. On our last call, we talked about the early success of our compliance concierge product offering, and we continue to see greater opportunities here. We were also in the testing phase for several new concierge products for SMBs, nonprofit, reinstatement, dissolution and entity conversion concierge.

Each of these high-end products afford customers the ability to offload their business' compliance needs, enabling them to focus on running their businesses. We saw encouraging signs of adoption across these offerings. Notably, we expect these products to carry profit margins at or above those that we typically see with DIY solutions. Additionally, via our sales center, we are testing the bundling of these do-it-for-me services into a subscription-only formation product bundle.

We've been testing 2 offerings: first, business concierge, which serves compliance and business expansion needs; and second, business concierge plus legal concierge, which adds access to our independent attorney network for additional legal guidance. The strong early adoption of these products demonstrates our ability to address the needs of the roughly 36 million existing small businesses with DIFM solutions that provide legal, accounting and business guidance from professionals at a cost that is significantly lower than that of a traditional off-line attorney, accountant or business manager. As an example, traditional lawyers can charge $500 per hour or more, whereas our DIFM products are typically under $1,000 for an entire year, even when they include access to an attorney.

It is also worth noting that our 1-800 account partnership continues to surpass our expectations. Given the strength of this partnership, we are looking at ways to deepen the relationship. For example, we will begin to test bundling their tax advice with our legal advice to create a seamless, easy to navigate and economical way to support businesses. We expect this offering to fully roll out next year. This provides a competitive advantage because we have learned that many of the questions asked of our legal advisers are actually tax related and vice versa.

This speaks strongly to our ability to diversify our business model and capture more of our SAM by entering near adjacencies such as tax and accounting. This brings us to our second strategic focus area, reorienting our go-to-market strategy. Our go-to-market strategy is focused on positioning LegalZoom as the trusted legal brand for small businesses. We launched a highly successful marketing campaign in May, technology when you want it, human support when you need it, reinforcing the principle behind AI augmented expertise.

We believe this campaign helped to drive aided and unaided awareness, both of which improved sequentially from the second quarter. We continue to shift our marketing spend away from SEM to brand marketing and other initiatives. By the end of Q3, we delivered a double-digit increase in return on ad spend or ROAS as compared to before the launch of the new brand campaign. It is clear that our message is resonating with SMBs and the strategy is working.

Building on this momentum, we plan to continue to reinvest cost savings we've realized elsewhere into brand marketing. And as we move toward activating a larger portion of our SAM opportunity through diversification, our new campaign scheduled for later this year will hone in on existing SMBs. We are also expanding visibility through strategic partnerships and driving new customers through growth in our channel partner program.

As a reminder, last quarter, we announced 2 collaborations of our legal support with Perplexity and OpenAI. This quarter, we are deepening our relationship with OpenAI and have become the first online legal services provider for SMBs to sign an enterprise deal with the firm. Among other areas, we will be collaborating with OpenAI to further integrate our product experience into their platform. So expect to hear more on this in the near future.

Our comprehensive efforts, including the modernization of our affiliate platform, the development of an embedded flow that allows partners to seamlessly integrate LegalZoom's business legal services and the establishment of new strategic partnerships has successfully fueled a roughly 25% year-over-year increase in our partner channel for the third quarter. Shifting to our progress in leveraging artificial and human intelligence to deliver expertise to our customers, our strategic priority is to use AI to augment human expertise and create a more personalized experience. Our OpenAI deal mentioned previously is a step in that direction, as were our earlier collaborations with Profplexitity and OpenAI.

One of the key tenets of this strategy is to leverage AI to create higher-value do-it-for-me offerings that improve compliance and efficiency. This area, in particular, is critical in our shift to addressing the needs of existing and established SMBs. Last quarter, we talked about introducing the capability to auto file compliance requirements. Our first release was a state annual report product. We've been rolling this out on a state-by-state basis, and we expect to have roughly 80% coverage by the end of the year.

We've also developed AI tools to augment our experts and to drive internal efficiencies. Our AI voice training call simulator increases agent efficiency and shortens onboarding time. We also deployed a legal and Salesforce Wizard to reduce customer response times. And our AI trademark classifier now automates processes that were previously manual. In addition, we've worked with 1-800 accountant to launch an AI-driven appointment center, which will deploy under our partnership for the upcoming tax year.

Lastly, as part of our commitment to our AI strategy, we made an organizational change that I believe will help us to advance product innovation through the integration of AI and human expertise. As part of this change, we are instituting AI mandatory standards, including training, testing and utilization across the entire organization. We've also reorganized our teams to ensure that AI sits alongside our human experts and becomes deeply integrated into how we deploy technology and product.

To effectuate this, Aaron Stibel now serves as our Chief Business and Customer Officer, where he will oversee technology, product, sales and service, creating a division at LegalZoom that fully integrates the customer, the expert and our artificial intelligence work. We believe that under this unified vision from development to customer delivery, we can leverage Aaron's deep experience and comprehensive track record of building technology platforms that drive a rich customer experience throughout the product cycle. As a reminder, Aaron has held similar previous roles at Dun & Bradstreet, including Divisional Chief Technology Officer and Head of the small- and medium-sized business unit.

As part of this change, our former CTO, Pratik Savai, is no longer with the company. This was not an easy decision. However, we believe this is the right move to deliver on what we believe is an outstretched opportunity in human and artificial intelligence to transform our business long term. With our more direct focus on driving AI-specific technology into our products, we are also announcing that Matt Kumin has joined the company as Senior Vice President and Head of Product.

Matt joins Legal Zoom from Amazon, where he served as Head of Alexa subscriptions growth, most recently leading the subscription launch of Alexa Plus, an AI-driven personal assistant. Matt brings more than 30 years of experience in the software and technology industry with deep knowledge of AI and customer-centric digital innovation. We believe his expertise will be instrumental in accelerating LegalZoom's ability to leverage AI and human expertise to increase value for customers.

In addition, to drive our momentum forward, we continue to bolster and expand our sales and service organization. To enhance cross-sell and upsell opportunities while elevating customer engagement, we've appointed Julie Mann as Vice President of Sales and Service. Julie brings nearly 20 years of experience building and scaling high-growth technology-driven teams, having led organizations at companies such as Tap Chat, Expedia and Optimizely.

She excels at creating systems that drive velocity, operational discipline and world-class team performance. Her data-driven leadership and expertise at the intersection of human and artificial intelligence will further accelerate our sales momentum. We are very confident that this organizational realignment will both accelerate and broaden our ability to deliver AI-powered technology when customers want it and high-touch human-powered service when they need it.

In closing, we've never been more energized about the future of LegalZoom. With a fully aligned organization, a strong balance sheet and accelerating growth, we are poised for even greater success and to unlock the next chapter of value creation. I'd like to thank the entire team for their efforts. Your dedication continues to drive our success. I'll now turn the call over to Noel to discuss our third quarter results and outlook in more detail. Noel?

I'll take that, Ella. It is an important lever. It is by no means the only lever, but it's a contributor. And it's something that we're pleased with because it is in our control. And candidly, we have started to act like market leaders again. And as we look at even what's happening in the competitive landscape, we're seeing pricing going up with our competitors now as well. So they're following our footsteps. So we feel like we are doing our job as leaders in this space and continue to drive both price and value in the right place.

No, I said thank you.

Yes. It's a great question and a broad one that starts with us really coming into our SAM and TAM. The idea here is we've got this massive addressable market, and we have been so myopically focused on a small piece of it. Those customers who are new formers who want to do everything themselves. So what we've done with these concierge-like products and our do-it-for-me offerings is we started to reorient the conversation around how do we solve the last mile for technology in a cost-effective way.

So whether you're coming in through traditional means, through search, through our brand advertising organically or now through artificial intelligence, as you gain increasing sophistication in terms of what you need done, at the end, you're going to want some type of expertise. And it's that combination of human and artificial intelligence that is going to be driving our products forward faster. Artificial intelligence, giving us leverage and scale and human intelligence giving us the difference maker that allows us to satisfy our customers over and over and over again in a recurring revenue model.

So where we're seeing strength back to the specifics of your question isn't just with concierge, but a concierge suite of products, finding those areas where things either are too expensive for a small business to use a lawyer or too difficult to do with technology alone. So we launched our first product which was concierge revolving around compliance, compliance concierge, had great success over the last couple of quarters and have now launched a series of others in that same category, nonprofit concierge, reinstatement, dissolution, entity conversion, and we're in the process of doing one with tax in partnership with 1-800 Accountant as well, which will launch likely next year so that we can embed their experts into our product line. The idea here is to give customers excess value at a reasonable but higher price than our typical ARPU. [ id="-1" name="Operator" /> Our next question comes from Pat McIlwee from William Blair.

Sure. And good question, and thank you for the kudos on the quarter. We're pleased as well. Appreciate it. I'll break it up into 2 areas in terms of where we think this can head and why we're so excited. I will caveat it by saying we signed that this week. So it's new, and we're going to build off of it. And it is an archetype for how we're thinking about these partnerships go forward. So the general idea is really twofold.

First and foremost, we want artificial intelligence to be ingrained in everything we do at this company. And we are making a statement and mandating that all of our employees are using AI deeply. But at the same time, we want to be tracking tangible returns and results. So importantly, some of the things that we plan on doing with OpenAI and with others is doing integrated product launches. And that was what I was referring to with respect to more to come.

We need to deliver results both on cost efficiency internally as we hand over some of that AI throughput to our experts to Ella's point, as well as be able to drive products that actually allow us to expand our go-to-market and expand TAM by embedding into some of these engines of growth and generalized TAM expanders as more and more small businesses grow more sophisticated about what it means to run and build a business. So it is those 2 areas that we're really excited about. Again, we're in the early innings, but we're now partnering with some of the best and brightest and becoming more integrated.

I've spent time over at OpenAI. We've had people come and sit down and work with us, and we've got our teams working together more and more closely. And I expect to see more things to come.

Sure. And what I'll do is rather than speaking to any one partnership, I'm going to speak to the strategy and impetus, and then I'll provide some bread crumbs in terms of the success that we're having. Effectively, what we're doing is we're looking at the trends and seeing a massive shift, a, in traffic; and then b, in terms of quality of traffic coming from traditional means such as search to these more generative and agentic technologies.

And what it is doing, and this is very much in line with what we are trying to do with our service and sales folks is it's moving from a search and answer to an education model. So what we're doing with these partnerships is we're trying to get deeper and deeper embedded and build relationships with the variety of groups that we know we can drive real traffic that is qualified and that can turn into both sales and then ultimately higher quality customers that are staying with us longer. And what I will say is we have seen a significant shift in terms of our growth of traffic from these AI engines as well as conversion rate.

And the customers that are coming to us are in our parlance, better customers than we see that are coming from traditional sources. They have a higher propensity to pay. We believe that they have a higher propensity to stay longer. They are better educated so that when they get to us, they need us to complete the last mile, not the first mile. And we are starting to see customers come who have already formed, who have existing businesses but are looking for us to solve problems.

So across the board, in effect, what we do as we sprinkle our opportunities across that broad mandate, we're actually able to push to a broad number of sources, which allows us to diversify our go-to-market. [ id="-1" name="Operator" /> Our next question goes -- comes from Trevor Young from Barclays.

And the nice thing, just to add one important piece as we get back to diversification, which helps to insulate us from risks, you see that strategy working well, which is our value-oriented program now. But outside of that, we're also seeing strong organic growth. So we're seeing wins come from both channels now.

It's a good question that is more complicated to answer than just give you a direct one because I think it depends on the product offering and the launch and the way that we're going about it. But the core business, we've thought about it as a minimum so that we know that we have a certain threshold of revenues and profitability coming in and then a rev share on top. And then some of these ancillary products, we're looking at on a case-by-case basis.

Most of these tend to be highly accretive to the bottom line. So it's really a function of making sure that we participate on the accelerated growth where we have these deeper integrations. Not lost on you, I'm sure. This is part and parcel to the knowledge we gained when we launched our own tax products, both the success and the challenges that we had. And I think we're taking the best of both worlds as we integrate these new products.

So I suspect we will see us getting closer and closer to 1-800 and any other partner, frankly, where we have the kind of success that tells us this is what our customers are looking for. [ id="-1" name="Operator" /> Our next question comes from Michael McGovern from Bank of America.

Thank you for that because it's probably the most strategic important question for us and one we have thought about deeply, one that has driven some of our organizational changes and one that's been informed by talking to and working with some of the partners that we have as well as some really bright minds in the space. The short answer is we also believe that will happen. We expect it to happen, and we're embracing that happening.

And it is part and parcel to our go-to-market and go-forward strategy. The idea here is just like why we thought in the beginning, we needed to have our salespeople owned and operated and why we need a broader base of experts. The most important thing we can do as a community is to educate these customers. These small- and medium-sized businesses need to be educated about their legal needs. So as LLMs make these potential customers more sophisticated, it effectively massively expands the market because what ends up happening when you look at the questions that are coming into LLMs is people are coming in thinking that they are asking a nonlegal question and leaving and going, I have a legal problem.

I have a legal matter. Some of that can be solved through Q&A with technology if people are patient and willing to do it and know whether they have something that is an aberration or phantom or whether it is actual real strong advice. But most of it needs some type of validation, and that's where we come in. So when we talk about solving the last mile problem, what we mean is the connected tissue between the Q&A and the intelligence that is needed to solve a legal problem is narrowing with technology.

But that gap will not close. You will still have some need for service, whether that's an expert, a paralegal, a lawyer or some type of integrated LLM product that can be backstopped by those experts so that there is oversight. That's where we come in. And that's why most of the AI and LLM community is embracing us because whether it's agentic or generative, there still needs to be some sort of feedback loop that has human intervention.

And that's where LegalZoom can play and where I think we are differentiated to a point where no one can compete with us because we have always been technology native and technology forward. And we are sitting on an expert war chest of thousands of partner lawyers and owned and operated law firm, experts in our sales and service team, and we are expanding into other categories where the legal to whether it's accounting or business manager or business expert bridge starts to blur so that we can provide broad-based advice because half of the time someone comes in with an accounting question and it ends up being a legal question and vice versa. It's the most exciting opportunity we have. [ id="-1" name="Operator" /> Our next question comes from Matt Condon from Citizens.

So on small business starts, you've heard this repeatedly from us. We are weaning our way off of that as the dominant form of how we take in, in particular, new businesses. And this is all focused on our ability to not just grow our business, but to grow in a diversified and insulated way. That doesn't mean we're not still highly dependent on small business formations. We will be for some time, if not for a very long time.

It will be a key component of our strategy. And to the extent that the macro is up significantly or down significantly, right now, of course, we don't know. But where we have tailwind, we're going to use it to our advantage. Where we have headwind, we're going to start diversifying. But the key thing here is we're working on more of the TAM than we ever have before. And this is how we drive into our serviceable market.

So when you think about what we're doing on diversification, we're now starting to do brand marketing, not just performance marketing. We're now leveraging partnerships to drive subscribers, not just revenues. We're now leaning in on existing businesses, not just new businesses. We're leveraging AI in a way that we weren't a year ago, not just search to deliver new business. And we're building out product suites on the DIFM side, not just DIY.

So I think that this is really critical to understand. We're not ignoring the macro. What we're saying is it will no longer be an excuse for us. We will have enough levers and leverage in the business so that we can manage through macro uncertainty as we're in right now or negative macro situations, whether it's the small business formations one that plagued us previously or the next one that comes up as we diversify and become more dependent on AI or something else for growth. We're managing our business as a diversified insulated growth-oriented business now that we have stabilized it.

Sure. I actually think using our concierge products, in particular, compliance concierge is probably the perfect case study. We launched this as an MVP. We started going after existing businesses that were in our ecosystem. We started to listen to our service folks, and they told us which products were of need for our customers. We effectively built a broad matrix that we looked at for determining what next products that we would launch.

We went from compliance to nonprofit, reinstatement, dissolution, entity conversion. We're now launching something in tax, all because the demand was there on the high end and for the most part, because these were subscription. We're now pushing this over to Kathy and her team on the biz dev side to say, go to existing partners and figure out where we can solve and satisfy their needs. Let's listen, let's learn from their customers and start going into those channels.

And then Daniel and our marketing team and saying, where can we go to market directly and start marketing to existing businesses, whether that's through AI, through some of our brand campaign, which we're going to be shifting towards the latter part of this year to speak to existing businesses. And ultimately, you can imagine we're going to go further and further down that path because these are businesses that are more stable, that are more insulated from risks of recession and ultimately have and are willing to give us a higher share of wallet. [ id="-1" name="Operator" /> Our next question comes from Ron Josey from Citi.

Sure. Happy to take that, Jake, and thanks for the kudos on the quarter. I'm going to start to sound like a broken record. This strategy is about diversification across the board. We want to make sure that we're insulated. So first off, that 25% year-over-year growth, we put that number out there because we think that, that is a new baseline and that we can continue to grow it. We're very pleased about what our partnership team and business development team have done to date.

But it is underwhelming, in my opinion, compared to what they're going to deliver in the future. And the reason is because we are now launching products for products -- sorry, for partners, and we're listening to what their needs are. Embedded is a key need. And yes, that drove a portion of that growth. Leaning in on our affiliate channels and treating these partners, not just as low-level affiliates, but as true partners and building out solutions for them was another key thing.

The deeper integrations that we've done with companies like Design.com is another good example of a success point that we will continue to lean in on as well as working with some of our existing longer-term partners who we continue to think highly of, and they've been moving mountains to help us such as Wix as an example. And then, of course, what we've done in our AI ecosystem. So when you look at this, the percentage increase is coming from a myriad of sources.

And each one of these is working to a varying degree. Not everyone will ultimately be successful. But the idea here is we're trying to put out multiple singles and doubles and triples. We're not looking for grand slam home runs. If we get one, we'll take it. I'm not adverse to getting a little bit lucky, but we will acknowledge when we're lucky and get back to work. [ id="-1" name="Operator" /> Our next question comes from Elizabeth Porter from Morgan Stanley.

So really across the board, we've seen success in this brand campaign. So both aided and unaided awareness and ROAS. I mean, you can run the metrics down from there because that means it's going to be helping with conversion. It's going to be helping with traffic. It is going to help our performance campaigns to perform better. And then ultimately, it helps us garner more partners because it reminds the world that we live in and that we work in that LegalZoom is the dominant brand for new, and this speaks to your next question, existing and established businesses long term.

So first and foremost, it reminds us that we need a diversified approach to marketing. We were highly dependent on performance and in particular, Google marketing previously. We have significantly diversified away from performance and away from Google into brand, into AI and into other areas, and that's paid dividends. Second, in terms of those learnings, we've realized that as the brand leader, building out our brand, strengthening that reinforces both our messaging, our brand prowess, but also our authority.

And authority matters in a big way when you see something like you're seeing with AI happening right now, which is a fundamental platform shift. And you don't see that very often. And to capitalize on that, you've got to get there very early, very aggressively, and you've got to maintain market leadership. And that has driven us, I think, to some early wins that we're going to be able to carry forward next year.

Thank you for that.

So you're wondering if we'll become the victims of our own success. I mean, look, I'm glad that the comps get harder next year. It means we performed this year, and that means we performed worse last year. Our expectation is we're going to continue to perform, and we're going to continue to accelerate. We are, at our heart, a growth-oriented business, and we believe that we can deliver results. And on the subscription revenue side, we've continued to see progress both year-over-year and quarter-over-quarter.

And that is a key focus area for us on a go-forward basis. On the unit side, it's a bit of a different story. We've communicated that on the unit side, we are using unit growth through bundling to drive tests. So that will jump around. But when you look at our core products, and I think Noel can speak to this more, we're seeing the right things and the right signs. With our core compliance products, we're seeing subscription growth.

We're seeing churn reduction, and we're seeing ARPU head in the right direction. And those are all trends that speak to a really solid roll forward as we head into next year.

Sure. I'll take those in order, and then Noel, feel free to add anything when I miss it. On our sales throughput and velocity as a company, we've seen steady progress, and we're actually pretty pleased. We have now taken an entire sales center from Formation Nation and shifted it over to LegalZoom, in part because they have so much embedded knowledge and learnings in terms of how they educate their customers and onboard them.

And we're actually very pleased with the progress and success. In the same vein, and this leans to what we've done operationally, we brought Julian because of the ability to really integrate sales and service into everything that we are doing from -- to be a customer-centered organization. Speaking to what we can deliver and the organizational changes that we made, I'm not even going to speak to next year. I'll speak to this year.

You heard in our prepared remarks, we launched 3 or 4 AI products this quarter. We wouldn't have been able to do that if we didn't do this reorganization. We were able to very quickly deliver on those AI products and integrate them into our back office, whether it's to our experts or to our service folks. In the same vein, we launched almost a half a dozen concierge products. Again, in the same vein, you wouldn't be able to do that if we didn't have our technology teams sitting hand-in-hand with our service folks.

And then finally, I'll say we're able to lean in on savings that we're generating internally now from technology efficiencies and then port that over to building products, leaning in on AI and driving our marketing forward as the throughput increases without any margin deterioration. Same thing. Without that operational change, I don't think we would have been able to do that so quickly and so seamlessly. [ id="-1" name="Operator" /> Thank you. I am showing no further questions. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.